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European stock markets wake up with losses dragged by the black day on Wall Street | Economy

View of the Madrid Stock Exchange shortly after the opening of the session this Thursday.
View of the Madrid Stock Exchange shortly after the opening of the session this Thursday.Vega Alonso del Val (EFE)

The crash on Wall Street this Wednesday is taking its toll on European markets. The stock markets of the Old Continent are trading this Thursday with sharp declines: the Ibex 35 loses more than 1% and leaves behind 8,400 points. Similarly, Frankfurt, Paris and London are down between 1% and 2%. Investors are thus reversing Tuesday’s rebound as they fear business results will suffer in an environment marked by rising interest rates in the United States, high inflation and uncertainty over the war in Ukraine.

Among the members of the Spanish selective, CIE Automotive, Inditex and BBVA are the most affected values, and fall more than 2%. On the other hand, Pharma Mar, Almirall and Naturgy manage to hold on in the green and advance around 1%. High prices for consumer goods, gas and energy continue to fuel fears of flagging economic growth. The latest bad news in this regard came this week, when the rise in the UK CPI in April to 9% was revealed. The Renta 4 analysis house recalls that the Bank of England itself does not expect to see the price ceiling until October, at levels close to 10%. On the positive side, the plans announced by Shanghai to resume activity and gradually end the confinement could serve as a catalyst in the coming days.

Wall Street suffered its worst day in almost two years on Wednesday. At the close of the session, the Dow Jones dropped 3.6%, the S&P 500 4% and the Nasdaq technology index, the most affected, 4.7%. In addition to the warnings of the US Treasury Secretary, Janet Yellen, about a potential entry of the world economy into a period of stagflation, the results of the retail distribution company Target caused an avalanche of sales in the US stock markets, as they warn. from Link Securities.

The company has reported $1 billion in profit between January and March, about half of what it made in the same period in 2021, well below expectations. Likewise, the profits of Walmart, the first retail company by turnover in the United States, fell 25% in the first quarter of the year, due to the pressure that inflation exerted on the firm’s operating costs.

Investors’ attention is once again focused on the impact of rising prices on consumer spending, which is faced with shrinking purchasing power. In addition, the market continues to value the possibility of further monetary tightening, as recently promised by the Federal Reserve, which is willing to raise interest rates as much as necessary to put an end to rising inflation. “Liquidity has been rotating through equity and bond markets as yields are falling in both the US and Europe, underlining the state of fear in the market,” said Pierre Veyret, Technical Analyst at ActivTrades. in a note.

Asian stocks have also been punished. The Hang Seng, the benchmark index of the Hong Kong Stock Exchange, closed this Thursday with losses of 2.54%, dragged down by the heavy losses that technology values ​​have discounted. The digital giant Tencent has revealed this Wednesday that its profits for the first quarter had been cut in half. The Japanese Nikkei has also concluded the session dyed red, with a drop of 1.89%. In the commodity market, both Brent, a benchmark for Europe, and West Texas Intermediate remain above 100 dollars.

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